Exxonistan: The future of Afghanistan?

U.S. and NATO forces are slated to leave Afghanistan in 2014, and the future beyond that is anything but certain. What everyone can agree on, however, is that the Afghan government needs money. A lot of it. Not only to replace the rapidly dwindling international donations, but to compete with the revenue from the opium trade which created the Afghan “narco-state.” The U.S. has directed considerable resources in an effort to break the grip of the opium industry. Still, it’s a formidable economic mainstay that has proven very difficult to replace. Afghanistan and the U.S. are desperate for a viable alternative. Like poor countries the world over, Afghanistan’s most easily monetized asset is its own physical self – its natural resources: enter multinational corporations.

The trajectory from war and crisis to economic meltdown and ultimately to the unrelenting onslaught of foreign corporations with their sights set on a country’s natural resources is a familiar one. For those who have observed the resource exploitation of countries like Indonesia, Chile, Russia, Argentina, Venezuela and more, the U.S. Geological Survey’s (USGS) 2011 report which touted Afghanistan’s mineral resources as having “the potential to completely transform the nation’s economy,” presents good reason to be nervous. That same year, the USGS estimated that the Amu Darya Basin along Afghanistan’s Northern border may have “volumes of undiscovered, technically recoverable, conventional petroleum resources.” The Afghan government has signaled that it is open for business. The question now is whether the international community has gained the expertise required to avoid the “resource curse,” whereby a country is drained of its natural resources while incurring significant humanitarian, economic and environmental damage, without seeing any monetary benefit.

China’s Metallurgical Group Corporation (MCC) was the first company to win a mineral mining contract with Afghanistan, and by many accounts, they’re not off to a great start. The terms of the contract itself are troubling, as Dr. Cheryl Bernard points out in The Daily Beast:

“In 2009, in its rush to riches, the Afghan government gave a Chinese mining company (MCC) the contract, and for terms that are causing pained shudders to those in the know. The inexperienced Afghan ministry may have thought $800 million to be a spectacular lot of money—and the alleged $30 million bribe to the then minister of mines may have played a part—but at 50 or 60 years’ worth of multibillion-dollar annual exploitation of this enormous deposit, it puts the purchase of Manhattan for a fistful of shiny beads into the shade, as great—or bad—deals go.”

The Chinese project can be seen as a litmus test of Afghanistan’s preparedness to absorb further investment. Issues range from how to handle significant archaeological finds, resistance from the local population and serious environmental risk, to lack of employment and training of Afghans, all topped with the threat of corruption on every level. China’s National Petroleum Company was also awarded Afghanistan’s first oil contract, and it remains to be seen how their operations will unfold.

This month, Afghanistan’s Mining Ministry announced that bidding is now open for exploration, development and production of oil and gas in new portions of Amu Darya. Among the bidders is American owned Exxon Mobil. “At this stage in game, Exxon’s interest can be viewed as a PR exercise,” argues Saad Mohseni, chairman of the Afghan Tolo News, “validating the Afghan government’s claim that the country is safe for foreign investment by major multinational corporations. If Exxon were to enter the arena, it would be like winning an Oscar for Afghanistan.”

If you’re rooting for the future of Afghanistan, it feels a bit strange to also be rooting for ExxonMobil; multi-national oil corporations have a hard-earned reputation for pretty much never being “the good guys,” and there is no reason to think otherwise in this case. Journalist Steve Coll, who has a thorough understanding of both Afghanistan and Exxon, recently said of the latter, “ExxonMobil really sees itself, proudly, as an independent sovereign, as its own government, in effect, and that it has its own foreign policies, its own economic policies.” But for Mohseni, the expectation is that Exxon’s policies would be good for Afghanistan. “There is the hope,” Mohseni explains, “that an American company of Exxon’s caliber would carry out the project according to international standards, environmentally, and otherwise.”

We live in a world where multi-national corporations operate in conflict-zones with their own agenda, where the idea of securing alternative sources of sustainable economic development for Afghanistan that don’t involve the draining of natural resources simply isn’t on the table. It is a given that Afghanistan’s natural resources are up for grabs. In the near future, Afghanistan will announce the winner of the Amu Darya contract. Whichever company is selected, we will have to watch closely to parse exactly what its foreign and economic policies are in Afghanistan, and hope they are aligned with Afghanistan’s best interests.